Treasurer Joe Hockey has given more mixed messages on entitlements today, defending fringe benefit concessions on company cars:
Despite his concerns about mounting government debt, Mr Hockey dismissed the idea of reintroducing Labor’s plan to save the budget $1.8 billion by tightening the rules on tax benefits for salary-sacrificed cars. The Abbott government reversed Labor’s pre-election decision, missing out on the much-needed revenue.
“My lord, if Labor had have gone ahead with their $1.8 billion hit on fringe benefits tax on motor vehicles, let me tell you [car makers] would’ve walked out the door in January rather than in 2017,” Mr Hockey said…
In the lead-up to last year’s Federal Election, the Coalition vowed to dump the former Labor Government’s proposal to stop people from claiming their leased car as an income tax deduction (and also avoiding GST on petrol) unless they could provide evidence that the car is used for work purposes.
The changes, which would have cost the typical person with a packaged car around $3,000, were designed to bring greater fairness to the taxation system by ensuring public funds were not used to subsidise private car use, while also saving the Budget around $1.8 billion over the forward estimates.
The whole fringe benefits tax fiasco was a nice microcosm of vested interest and rent-seeker politics in Australia. It was a simple change to the tax code that should have been made years ago in the interests of both fairness and Budget sustainability.
The fact that it garnered such strong opposition highlights how an ecosystem of rent seekers has been built-up around every pocket of government policy, making any kind of reform difficult.
It also shows why the Government must have a consistent and transparent methodology if it is to achieve its goal of “ending the age of entitlement”. Slashing benefits to some sections of the economy, whilst allowing egregious lurks to remain in others, will make the Coalition an easy target for ridicule. It will also ensure that the burden of adjustment is not broad-based, undermining its efficacy.
This truth can seen as well in today’s rebuttal by Toyota:
Toyota has rejected a claim that it told Treasurer Joe Hockey the Australian Manufacturing Workers’ Union (AMWU) was behind its decision to cease manufacturing in Australia.
Toyota this week announced it would stop making cars in Australia at the end of 2017, blaming a combination of factors including the unfavourable Australian dollar, the high cost of manufacturing in Australia, as well as trade deals and the fragmented car market.
Yesterday, Prime Minister Tony Abbott suggested the AMWU was also to blame for refusing to renegotiate a workplace agreement for workers at Toyota’s North Altona plant.
Mr Hockey today said that Toyota Australia president Max Yasuda raised concerns with him about the generous conditions during a private conversation last year.
…However Toyota has released a statement saying it has never blamed unions for its decision to close, in either public or private conversations with stakeholders.
The car maker said as stated at the time of the announcement, there was no single reason that led to this decision.
The admirable project of ending entitlement is not being well served by those who are selling it. Joe Hockey should aim to end entitlement for Australia, not the select few he chooses.
